Ichigo Preserves and Improves Real Estate[Provisional Translation Only]
This English translation of the original Japanese document is provided solely for information purposes.
Should there be any discrepancies between this translation and the Japanese original, the latter shall prevail.

October 30, 2017
IssuerIchigo Office REIT Investment Corporation (“Ichigo Office,” 8975)
1-1-1 Uchisaiwaicho, Chiyoda-ku, Tokyo
Representative: Yoshihiro Takatsuka, Executive Director
www.ichigo-office.co.jp/english
Asset Management Company
Ichigo Investment Advisors Co., Ltd.
Representative: Wataru Orii, PresidentInquiries: Hiroto Tajitsu, Head of Business Administration
Tel: +81-3-3502-4891

Earnings Forecast Revision for the April 2018 Fiscal Period andEarnings Forecast for the October 2018 Fiscal Period
Ichigo Office is revising up its April 2018 earnings forecast that was announced in theJune 14, 2017 release “Earnings Summary for the April 2017 Fiscal Period,” and is alsoannouncing its October 2018 earnings forecast.
October 2017 earnings will be announced on December 15, 2017. The current October
2017 forecast is unchanged.
1. April 2018 Earnings Forecast Revision(JPY million)Operating
ProfitRecurring
ProfitPrevious Forecast (A)

7,338

3,551

2,735

2,735

1,940

New Forecast (B)

7,408

3,616

2,812

2,811

1,940

Difference (B) - (A)+69+64+76+76–+1.0%

+1.8%

+2.8%

+2.8%

–% Change

Net Income per share: JPY 1,834

Net
IncomeDividendper Share(JPY)

Operating
Revenue

Period-end number of shares outstanding: 1,532,287 shares

The forecast presented above is based on certain preconditions set out below in“Preconditions for April 2018 Earnings Forecast.” The actual operating revenue,operating profit, recurring profit, net income, and dividend may vary due to changes incircumstances such as asset acquisitions and dispositions, tenant turnover, unexpectedmaintenance and repair costs and other expenses, changes in interest rates, and theissuance of new shares. These forecasts should not be construed as a guarantee of such
performance or results. Ichigo Office will make a forecast revision should there be a
substantial discrepancy between the forecast and actual operating results.

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2. Reason for April 2018 Earnings Forecast Revision
Ichigo Office is currently executing Stage VII: Lay Foundation for Long-Term Growthof its Growth Strategy Roadmap (see Reference below), and continues to invest tosupport sustainable growth in shareholder value.
Given the current upside to value-add capex in the current real estate market, in order toincrease funds available for value-add capex and drive EPS and portfolio growth, Ichigo
Office has decided to decrease its per-period negative goodwill amortization from JPY
200 million to JPY 105 million or more (the minimum per the Investment Trusts
Association, Japan’s rules on negative goodwill amortization). Beginning the move tothis lower amortization level, Ichigo Office now expects April 2018 negative goodwill
amortization of JPY 162 million.
April 2018 operating revenue is expected to exceed the previous forecast by JPY 69
million as a result of a JPY 57 million increase in rental income and a JPY 23 million
increase in insurance income, partially offset by a JPY 7 million decrease in utilities
income from tenants and a JPY 3 million decrease in income from parking fees.
Operating expenses are expected to exceed the previous forecast by JPY 5 million,comprised of a JPY 28 million increase in service provider expenses and a JPY 14
million increase in maintenance repair costs, partially offset by a JPY 38 million
decrease in utilities expenses and a JPY 1 million decrease in non-rental expenses.
Operating profit is therefore expected to increase by JPY 64 million.
Non-operating expenses are expected to decrease by JPY 11 million, primarily driven
by a decrease in loan refinancing fees. Recurring profit and net income are therefore
each expected to increase by JPY 76 million.
Forecast dividend per share and total dividends are unchanged at JPY 1,940 and JPY
2,972 million, respectively. Per the above, the dividend forecast assumes JPY 162 millionof negative goodwill amortization.

23. October 2018 Earnings Forecast(JPY million)
Operating
ProfitRecurring
ProfitOctober 2018
Forecast (A)

7,531

3,652

2,867

2,866

1,940

New April 2018
Forecast (B)

7,408

3,616

2,812

2,811

1,940

Difference (B) - (A)+122+35+54+54–% Change

+1.7%

+1.0%

+2.0%

+2.0%–Net Income per share: JPY 1,870NetIncomeDividendper Share(JPY)

OperatingRevenue

Period-end number of shares outstanding: 1,532,287 shares

The forecast presented above is based on certain preconditions set out below in“Preconditions for October 2018 Earnings Forecast.” The actual operating revenue,operating profit, recurring profit, net income, and dividend may vary due to changes incircumstances such as asset acquisitions and dispositions, tenant turnover, unexpectedmaintenance and repair costs and other expenses, changes in interest rates, and theissuance of new shares. These forecasts should not be construed as a guarantee of such
performance or results. Ichigo Office will make a forecast revision should there be a
substantial discrepancy between the forecast and actual operating results.
4. October 2018 Earnings Forecast Rationale
Despite an expected decrease in period-occupancy of 0.4% versus April 2018, October
2018 operating revenue is expected to increase by JPY 122 million, comprised of a JPY
82 million increase in rental income and a JPY 49 million seasonal increase in utilities
income from tenants, offset by a JPY 10 million decrease in insurance income.
Operating expenses are expected to increase by JPY 86 million versus April 2018,
comprised of a JPY 57 million seasonal increase in utilities expenses, a JPY 45 million
increase in property tax, and a JPY 40 million increase in non-rental expenses, partiallyoffset by a JPY 54 million decrease in depreciation expenses. Operating profit istherefore expected to increase by JPY 35 million.
Non-operating expenses are expected to decrease by JPY 19 million versus April 2018,
primarily driven by a decrease in loan refinancing fees. Recurring profit and net income
are therefore each forecast to increase by JPY 54 million.
Forecast dividend per share and total dividends are expected to remain unchanged from
April 2018 at JPY 1,940 and JPY 2,972 million, respectively. The dividend forecast
assumes JPY 105 million of negative goodwill amortization.

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Preconditions for April 2018 Earnings Forecast
PeriodApril 2018: November 1, 2017 – April 30, 2018 (181 days)

Number ofAssets

 85 assets

Number ofShares 1,532,287 shares issued and outstanding as of today

OperatingRevenue Rental income is calculated conservatively based on lease contracts that are in effectas of today while taking into consideration historical rents and asset and marketconditions.
 Total occupancy: 96.9% as of April 30, 2018

OperatingExpenses• Depreciation: JPY 920 million. Depreciation has been calculated using the straightline method and includes the depreciation of forecast future capital expenditures.
• Property, city planning, and depreciable asset taxes: JPY 589 million• Building maintenance and repair expenses: JPY 120 million. However, expenses may
differ significantly from these estimated amounts for reasons including the variabilityof maintenance and repair expenses, one-time costs due to unexpected building
damage, etc.
• Service provider expenses, including property management fees: JPY 680 million• Performance fees: zero
• Rental expenses, Ichigo Office’s principal operating expenses (other thandepreciation, see above), are calculated based on historical data adjusted for
anticipated expense variations.
• Actual operating expenses may differ significantly from these assumptions due tounforeseeable factors.

Non-OperatingExpenses• Interest expenses on loans and bonds: JPY 523 million• Other borrowing-related expenses: JPY 280 million

Interest-Bearing
Liabilities• Loans and bonds: JPY 103.3 billion outstanding as of April 30, 2018

Dividend The dividend forecast assumes that dividends will comply with the dividend
distribution policy stipulated in Ichigo Office’s Articles of Incorporation.
 Total dividends are forecast to be JPY 2.972 billion (Net Income of JPY 2.811 billion
plus JPY 162 million of negative goodwill amortization, rounded down, as necessary,to create a dividend per share that is a whole number).
 The dividend is subject to change due to changes in circumstances such as asset
acquisitions and dispositions, tenant turnover, unexpected maintenance and repair
costs and other expenses, changes in interest rates, and the issuance of new shares.

Dividend in
Excess ofEarnings

 Ichigo Office does not plan on paying any dividend in excess of earnings.

Other This forecast assumes that there are no material revisions to laws and regulations, thetax system, accounting standards, listing rules of the Tokyo Stock Exchange, andrules of the Investment Trusts Association, Japan, and no material changes in thestate of the economy and real estate market conditions.

4Preconditions for October 2018 Earnings Forecast
PeriodOctober 2018: May 1, 2018 – October 31, 2018 (184 days)

Number ofAssets

 85 assets

Number ofShares 1,532,287 shares issued and outstanding as of today

OperatingRevenue Rental income is calculated conservatively based on lease contracts that are in effectas of today while taking into consideration historical rents and asset and marketconditions.
 Total occupancy: 96.5% as of October 31, 2018

OperatingExpenses• Depreciation: JPY 865 million. Depreciation has been calculated using the straightline method and includes the depreciation of forecast future capital expenditures.
• Property, city planning, and depreciable asset taxes: JPY 635 million• Building maintenance and repair expenses: JPY 124 million. However, expenses may
differ significantly from these estimated amounts for reasons including the variabilityof maintenance and repair expenses, one-time costs due to unexpected building
damage, etc.
• Service provider expenses, including property management fees: JPY 674 million• Performance fees: JPY 34 million• Rental expenses, Ichigo Office’s principal operating expenses (other thandepreciation, see above), are calculated based on historical data adjusted foranticipated expense variations.
• Actual operating expenses may differ significantly from these assumptions due tounforeseeable factors.

Non-OperatingExpenses• Interest expenses on loans and bonds: JPY 538 million• Other borrowing-related expenses: JPY 247 millionInterest-Bearing
Liabilities• Loans and bonds: JPY 103.2 billion outstanding as of October 31, 2018

Dividend The dividend forecast assumes that dividends will comply with the dividend
distribution policy stipulated in Ichigo Office’s Articles of Incorporation.
 Total dividends are forecast to be JPY 2.972 billion (Net Income of JPY 2.867 billion
plus JPY 105 million of negative goodwill amortization, rounded down, as necessary,to create a dividend per share that is a whole number).
 The dividend is subject to change due to changes in circumstances such as asset
acquisitions and dispositions, tenant turnover, unexpected maintenance and repair
costs and other expenses, changes in interest rates, and the issuance of new shares.

Dividend in
Excess ofEarnings

 Ichigo Office does not plan on paying any dividend in excess of earnings.

Other This forecast assumes that there are no material revisions to laws and regulations, thetax system, accounting standards, listing rules of the Tokyo Stock Exchange, andrules of the Investment Trusts Association, Japan, and no material changes in thestate of the economy and real estate market conditions.

5Reference
Growth Strategy Roadmap
Stage VI

2011/10

2016/102017/10

2018/42018/10Grow Office Portfolio

Lay Foundation for Long-Term Growth■ Organic Growth Strategy
Drive growth with strong Ichigo Office brandand 100 asset portfolio
・Increase competitiveness of Ichigo assets via
strong Ichigo brand・Develop original services for Ichigo tenants
・Drive higher rents within and outside of Tokyo・Maximum return on capex

Durably and Dynamically Grow Ichigo Office
Generate Funds to Invest for Growth・Secure funds for growth investments via strategic portfolio
restructuring and sale of non-office assets
・Rework implementation of dividend reserve releases
Invest for Sustainable Growth in Shareholder Value・Acquire high-quality assets via portfolio restructuring or usingborrowing capacity
・Carry out value-add capexGoals

Action Plans

Stage VII2017/4■ External Growth Strategy
Aim for portfolio size of JPY 230B
・Broaden acquisition pipeline via diversified
sourcing
・Use Ichigo sponsor support and diversified
funding capability to close quickly underdeadline■ Financing Strategy
Improve credit rating and diversify funding・Achieve an A (Stable) credit rating
・ Consider issuance of bonds and broadening
lender base・ Use financial strength and commitment line togrow acquisition capacity
・Further improve borrowing terms
・Enter global REIT indices■ Organic Growth Strategy
・Achieve minimal downtime between leases
・Carry out value-add capex to drive higher returns
・Implement environmental sustainability initiatives to grow longterm value
・Build a trusted Ichigo brand■ External Growth Strategy
・Restructure portfolio to drive higher portfolio quality
・Acquire assets to increase shareholder value
・Consider M&A■ Financing Strategy
・ Further improve borrowing terms
・ Diversify funding via issuance of bonds
・ Raise credit rating
・ Enter global REIT indices

Dividend and Base EPS
Base EPS

Dividend 1,923
241

1,682

April 2017

(JPY)

Reserve Payouts

164

1,940
106

1,940
70

1,766

1,834

1,870

October 2017
(Forecast)April 2018
(Forecast)

October 2018
(Forecast)

1,930* Base EPS = EPS excluding capital gains on asset sales

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